Big issues – Supply Management

13 June 2013 | Paul Snell

From talent management to supply chain success, this year’s Institute for Supply Management conference really packed a punch when it came to addressing the issues affecting procurement professionals. Paul Snell reports.

According to the expression, “everything’s bigger in Texas” – and this year’s Institute for Supply Management (ISM) conference certainly lived up to this expectation. As ISM CEO Tom Derry pointed out in his opening address: “ISM members spend over $1 trillion – arguably the largest single non-governmental economic impact on the planet.”

Many of the issues addressed at the event will be familiar to purchasers elsewhere in the world. Career development, the future of the supply chain and supplier relations all came under the spotlight.

Here’s a round-up of what was discussed…

Talent management

Naturally, career development and recruitment and retention of procurement staff is just as hot an issue in the US. Indeed, according to Deborah Beavin, CPO at health insurer Humana, attracting excellent talent is a procurement director’s most important job. “If we don’t get the right people in the right roles – and they can’t all be cookie cutter – then we can’t be successful in meeting the performance that is expected of us. People matter – and they matter a lot.”

So what are procurement leaders looking for from potential candidates? A panel of four CPOs agreed technical competence should be taken for granted and buyers should focus on expanding other skills. These included persistence and resilience in the face of change, the ability to be a change agent, intellectual curiosity, motivational skills and a commitment to the profession. “It doesn’t mean they have to be from the profession. It could be through demonstrated experience, a statement they are excited about supply management and understand what it means,” said Tim Fiore, CPO at ThyssenKrupp North America.

Beavin pointed to the ability to mentor others as a key requirement and how to develop a relationship with a mentor was the focus of another seminar. Identifying influential and passionate individuals within the business – and trying to find a connection with them – was one suggestion. 

“I tell my team not to approach them by saying: ‘I want to establish a mentor/mentee relationship with you’. If it is someone who is influential, see if they will meet you for a coffee or lunch and spend half an hour talking about career development and then see if you connect. If you just don’t connect at the end of the half an hour, it’s easy to say ‘I really appreciate it’ and you can walk away,” said Bill Dempsey, vice president of global procurement at Shire Pharmaceuticals.

“To me, to ‘connect’ means you have some mutual interests and the conversation flows pretty easily. Maybe it is a similar outside of work activity or passion for your area. You sort of know when you have it,” he added.

But the onus in a mentoring relationship should not just be on the junior partner. According to Ron Schnur, vice president dairy supply operations at WhiteWave Foods, more experienced professionals have a duty to give back to the younger generation. “I have enjoyed a great career in supply chain over the past 25 years and part of it is giving back to the profession, organisation and young people. Back in the day when I started at Chrysler, I stood on the shoulders of a lot of people; today I have to allow people to stand on mine,” he said.

There was advice, too, for those just embarking on a career in the procurement and supply chain profession. American Red Cross CPO Jill Bossi reassured delegates everyone experiences failure at some point in their career, but how you bounce back is what is important. She said you learn far more from making mistakes than from success.

Bossi also urged people to take control of their own career, as you cannot expect somebody else to do it for you. But while concentrating on future career opportunities is important, don’t let it undermine your day job. As Jamie Hoke, operational supply management specialist at John Deere, said: “Learn to manage your current responsibilities before focusing on your next job. I know a lot of us want to climb the ladder really fast, but the best way to build a resumé is to drive results. If you don’t have anything to talk about at your interview, you probably won’t get the job.”

Future of the supply chain

How supply chains will operate in future was another key topic. Tom Linton, CPO at Flextronics, is adamant the concept of “virtual vertical integration” will be a strategy that “when the books are written about this time, they will say there were profound changes in this industry”. He said this approach means seeing suppliers as an extended enterprise that behaves as if internal to the company.

He likened the concept – where suppliers are in one of four tiers; brand owner; integration; device; and raw material – to the structure of a sports team. There is an owner (the brand level) who hires the coach (the integration tier), and controls him and tells him what to do. The coach then hires the players (the device level).

This would not have been possible a decade ago, he said, but developments in technology mean now it is. “Companies that actually get a handle on this kind of supply chain, I believe in the next decade will be the ones that are going to rock this world.”

In another of the keynote addresses, Stanford University professor Hau Lee claimed those supply chains that could demonstrate ‘smart sense’ would be the ones to gain competitive advantage.

This smart sense manifests itself in the way companies both analyse and respond to information that comes from their supply chain. To do so you have to understand your customers, be aware of distorted information and collaborate with suppliers to leverage the information they have available.

 “Hyper-agility is the rule of the game. Agility is not enough. If you want to be ahead of the competition, you need hyper-agility,” he said.

A straw poll of 575 delegates at the conference found 30 per cent said it was either ‘likely’ or ‘very likely’ they planned to re-shore some of their sourcing to the US in the next 12 months. This was addressed by Lee’s fellow Stanford colleague – and former US secretary of state – Condoleezza Rice.

“When you talk to CEOs in the US they say, ‘I would love to bring some of those jobs back home, but I can’t find the right skill level to do it’,” she said. “So if we can start to match up skill levels, we might do something about the expense of higher education for some students, and begin to bring manufacturing jobs back to the US.”

Supplier relations

Supplier management was unsurprisingly another big topic for discussion. With a spate of recent vendor-related problems in the news, Kirsten Liston, associate vice president at SAI Global, put forward five tips to manage supplier compliance. These included: making compliance a factor in supplier selection; segmenting vendors by potential risk; creating a compliance profile of each supplier; assigning ethics and compliance personnel to relationships; and carrying out regular assessments.

What to do when a supplier relationship goes wrong was the topic of a presentation given by Eric Germa, CPO at US retailer ANN Inc. He explained how his team had turned round an IT outsourcing deal that went wrong and what lessons had been learned. His top tips? Improve governance, secure executive commitment to fix the problem on both sides and change the mindset of your own organisation that it is not all the supplier’s fault and the company needs to take ownership of the problems.

A separate seminar addressed the problems created by those suppliers that want to bypass procurement altogether. According to Claire Auroi, director, supply chain business development at Bombardier Aerospace, you will never stop this, but you can try to manage it.

“Don’t think for a second that it won’t be there. It exists and will exist, so how do I control that? Communication is key, internally and externally. You pass the message to your suppliers that this behaviour is not accepted,” she said. “Learn how manage it and take a comprehensive, ‘one voice’ approach.”